Financial Services Tech Forum

An interesting story developed recently on a blog post and survey that I posted. No names will be shared and all evidence has been removed, but it poses a very interesting and serious question that warrants feedback and another survey request on social networking iteslf.

I had a voicemail the other day from someone who had left a comment on a survey, and was unaware that the comment would show both name and company where this individual works. The company has a strict policy regarding when someone can represent their organization in a public forum. The views expressed by this individual where clearly not representing the organization, just that persons thoughts - but as soon as the company name appeared next to it, the best course of action was to remove such…

With the EU announcing their considered thoughts on the future of regulation it is becoming clear that Financial institutions will be hit with a rapid succession of variety regulations that have the ability to significantly alter the banking landscape for years to come. Three distinct waves of regulation are gathering pace as the fallout from the financial crisis has galvanised politicians to spur regulators into action to show the public previous behaviour was unacceptable. This appeasement strategy and th

These three waves of local/consumer, national and regional regulations are all pressing forward simultaneously with little or no concern for the overlap, data requirements, reporting infrastructures or regulatory coordination essentially tripling the burden on an institution. Moreover there is little evidence that the new layers of regulation will be nothing more than data gathering talking shops with little or no power to effect real change in the industry. Rarely does the same risk cause two…

As I continue to see the big banks and the small banks go after each other about who should pay a larger premium to the FDIC, I thought of a poll question. Feel free to take the LinkedIn poll, and leave your comments here, but so far there are some pretty interesting trends. The question: Who in your opinion is responsible for STARTING the US financial crisis? The results (so far): 1st: Large Banks 2nd: Government Policy 3rd: Investment Firms 4th: Consumer Behavior 5th: Small Banks (no votes)

What is interesting here is that nobody feels that the small banks are responsible for this crisis, yet there is no doubt that they are feeling the brunt of things. As we witnessed this weekend, two more failed institutions has pushed up the meter of failed institutions to 36. All of these institutions have been relatively small banks (less than $10B), yet it is taking a toll on the insurance fund. Large banks have certainly been vilified in the media and on Wall Street, yet was it a matter of…

The FDIC has had now three approaches to address the growing need to help increase the ever dwindling reserve insurance fund which has been busy recently bailing out failed institutions. The latest FDIC approach will present a bill to banks based on assets, not deposits. The concern was that a deposit approach would unfairly penalize the smaller institutions, while this proposal seems to put more of the burden on the larger institutions. To be fair, the entire assessment is on assets minus tier 1 capital, w

I go back and forth on this one. The middle name of the FDIC is of course deposits, not assets. The premium is meant to insure the deposits on hand as the FDIC does not insure assets of an organization. Also, the most recent bailouts have been for smaller institutions, not the larger ones and examples exist where large banks have acquired other large banks to prevent a huge drain on the FDIC - witness JP Morgan Chase acquiring Washington Mutual.

One benefit of the financial crisis is a renewed interest in corporate treasury - both from banks and their corporate customers. To increase visibility into cash flows, improve efficiency, and increase controls, businesses are investing in financial management tools. Corporate treasurers now have wallets with cash in them, and they are investing in new technologies - but in this case it doesn't mean bank IT spending on treasury services (including cash management) will also rise.

Although Financial Insights agrees that cash management and the broader treasury services market is one that is counter-cyclical, we do not forecast an increase in bank IT bank spending. Financial Insights forecasts IT spending on North American treasury services will experience a slight decline in 2010 of 1.4%. This is less of a decline than the average for the North American banking industry, but still not positive. When forecasting IT spending, it is important to take into account the impact…

When Timothy Geithner, Ben Bernake or Sheila Barr speak, everyone in the world listens. Meanwhile, while Julie Dickson -- head regulator of federally regulated Canadian financial institutions speaks -- you have to really dig to find it. Both Canadian and global financial institutions should be paying more attention.

She gave two speeches in the last week. The first was to the 2009 Financial Services Invitational Forum in Cambridge, Ontario. The speech centred on the role of directors in the board in managing financial institutions. She asked the question "Where were the directors?" when the financial crisis occurred -- as she feels that directors have a essential oversight role in risk management. There are not any boards out there getting an "A" from Julie. One of the…

A report today on Bloomberg states that first quarter results for AIG have improved from the fourth quarter loss of $61.7 billion and may be sufficient enough to not require additional capital from the goverment.

This would certainly be good news for AIG (as well as U.S. taxpayers). When coupled with Warren Buffett's pronouncement that Berkshire's insurance businesses had a first-quarter, underwriting profit that was "a little better than last year," and that his insurance businesses are "relatively unaffected by the recession," does that mean we may be turning a corner? Let us know what you think.

Earlier this evening Treasury Secretary, Timothy Geithner, proposed a framework to bring more stringent regulation the OTC derivatives market. The goal of this proposed framework is to reduce the risk, market abuse and improper marketing to unsophisticated parties, while increasing transparency for OTC derivatives; credit default swaps and the like. To achieve these results there are several primary objectives: All standardized OTC derivatives must be exchange traded and cleared There will be greater dealer

The main story being talked about is the increased transparency this will bring and how the buy-side benefits and the sell-side looses out, etc. But as you peel away and look at some of the proposal details there is a large list of secondary items that the Treasury is proposing that can bring about new opportunities for a host of other firms. For one companies like CME Group and Intercontinental Exchange stand to do very well from these changes as they would be the likely exchanges that these…

Within financial services, there are many technologies and access methods brought to bear to win the hearts, minds and wallets of consumers. Current hot topics include Web 2.0 technologies, the opportunities (and threats) of social networking, and mobile banking. Adding complexity to this discussion are the number of channels such as branch, mobile, internet, and ATM which more often than not seem siloed rather than strategic parts of an overall plan. Finally add to this a tepid (at best)

Given the current state of the industry we just described however, is a new business model also needed for banks, especially in how they interact with consumers? Is there in fact a good business model that marries the best of the internet, mobile, and social networking perhaps even outside banking? Can you say iPhone?

Certainly this is just one example, but the real message for banks (and the vendors who support them) is around ease of use, utility and value as perceived by…

People retain a higher percentage of understanding when they are able to both see and hear an individual speak. Let's face it, as travel becomes more restricted and virtual becomes more accepted, the growth of delivering video content on the web will only continue to grow expodentially.

Recently, the New York Times interviewed James J. Schiro, CEO of Zurich Financial Services. Mr. Schiro talked about how he is now putting 1-2 minute video segments on YouTube to communicate information to his employees and customers. He is no fan of the long slide shows, and prefers the quick delivery method offered by these services.

We at Financial Insights, have also been building out our YouTube Financial Insights channel. As we post video blogs here and on YouTube, we feel it is an…